Toogood: Play the Slowdown

CNBC.com

Tuesday, 8 Apr 2008 | 11:19 AM ETCNBC.com

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Investors need to decide whether or not we are experiencing a full-blown recession or another mid-cycle slowdown to decide on the best strategies to make money in these turbulent markets, Peter Toogood, CIO of Forsyth Partners told CNBC Europe.

Toogood: 'A slowdown is a slowdown'

"You've got to decide now whether you think it's an outright, full-blown recession or a mid-cycle yet again," Peter Toogood, CIO of Forsyth Partners, told CNBC. "I do not accept the principle that we're in an outright recession."

But either way, Germany in particular shows investor potential as a leading engineering and manufacturing country, despite some calling it, 'the weak man of Europe', he said, as it has shown flexibility amid the global turmoil.

Also, Toogood is bullish on European equities and said the UK property sector, although currently under pressure, is a good long-term prospect.

"I do not accept the principle that we're in an outright recession. A slowdown is a slowdown. It's slower growth. The debate is now about semantics. It's about what comes next," he said.

As financials are experiencing a relief rally and the U.S. Federal Reserve is still in stage one of its recovery assistance measures, a new Bear Stearns is unlikely in the near future, at least theory, Toogood said.

Analysts who are preoccupied by macroeconomics and those whose concerns lie more on what happens in companies are in the midst of a fire fight to determine where exactly the markets are headed, he said.

While arming themselves with their combat gear however, analysts are missing their marks, according to Toogood: "The analyst community generally lags on both sides. It lags too much in a recovery and it's too late to change its mind at the point of an inflection and we've seen an inflection point."

After four years of running with the bulls, global markets have finally hit a turning point with the impact of the subprime housing market crisis and the global credit crunch. According to Toogood, the only thing anyone knows for sure is that the next three years will be slower than the previous four.

"You can make that as a statement of fact. We've just had the strongest four years since the seventies for world trade growth. It will be slower," Toogood said.

"Position yourself around that slowness, and what pockets will and won't work is the key for the next twelve months," he added.